Now the heat has been turned up by our transtasman neighbours. Treasurer Jim Chalmers this week delivered the first Budget surplus in 15 years and will pump almost $16 billion into the Australian economy to help alleviate the rising cost of living for households.
There’s $10b in increases to unemployment benefits and other welfare payments, $3.7b in incentives for doctors to provide more free consultations, and $3.2b in one-off energy bill discounts. The Budget also includes a $12b boost to the pay packets of aged care workers, cheaper childcare subsidies, and more rent assistance.
All this, combined with the recently-smoothed pathway to citizenship for New Zealanders, will only heighten interest from our depleted and dissatisfied workforce.
There’s always hope, however. The most recent Budget policy statement, released in December, stated the Government will manage fiscal policy to take pressure off inflation and return spending to normal levels following the pandemic response.
At the same time, a need was recognised to balance those measures with support through a “shallow speed-bump” recession forecast for 2023. “As we navigate through this period, our primary focus at the Budget will be on supporting families and households experiencing cost of living pressures,” the policy stated.
In our case, Treasury has forecast the Government will return the books to surplus in 2024/25, marking five years of deficits following the onset of Covid-19. That would be a good outcome considering the six years of deficits run by the previous government after the Global Financial Crisis.
More positive news is that by the time New Zealand returns to surplus, deficits will be a combined $5.1b smaller than forecast back in May last year.
Better prospects are just over the horizon, and apparently improving as we approach it. Next week’s Budget will need to tell that story while delivering the right measures of targeted assistance with fiscal prudence.
Australia’s remarkable economic turnaround may impact on our labour force, but also shows it can be done.